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The study by Inalytics, a specialist firm that assists pension funds with the selection and monitoring of equity managers, found

Inalytics examined 215 long only portfolios, with a combined market value of $152bn, to investigate the number of correct decisions managers make as a percentage of the total number of decisions - their hit rates - and compare the alpha generated from good decisions to the alpha lost from poor decisions - their win:loss ratio.

Overall, six correct decisions out of 10 constitutes solid performance. However, the study found the average hit rate was 49.6 per cent – no better than 50:50.

However, Inalytics said the typical manager compensates for a mediocre hit rate by generating good gains from the winners, which serves to offset the losses from poor decisions.

This trend is reflected in an average win:loss ratio of 102 per cent – meaning that the alpha derived from good decisions is 2 per cent more than that lost from poorer ones.

Rick Di Mascio, chief executive and founder of Inalytics, said: "The measurement of hit rates and win:loss ratios highlights how a manager generates alpha and whether the track record can be relied upon as a useful indicator of skill.

"It reinforces our attempt to steer investors' focus away from the track record towards an analysis of individual investment decisions.

"The real point is that track records may come and go but a manager's tendencies are more persistent.

"In general, managers are good at buying and going overweight but poor at selling and going underweight. Hit rates and win:loss ratios are a very effective way of identifying these tendencies."